San Francisco Introduces Energy Efficiency Retrofit Program

he City of San Francisco is paving the way for owners of residential and commercial buildings to conduct green upgrades to their properties through an innovative financing program.  The San Francisco Sustainable Financing Program (SF2) will provide owners with affordable financing for green retrofit projects, with the repayment obligations tied to the property rather than the owner. The loan repayments and interest will be added to the building’s property tax bill, and paid back over the loan period.

Energy-saving upgrades, such as solar installations and replacement heating systems, are often unattractive to owners because they require sizable upfront expense, whereas it takes many years for the benefits from these improvements to accrue in the form of lower energy bills.  In a traditional financing arrangement, the owner who arranges the financing is responsible for future repayments, even if they were to sell the property during the life of the financing. The property tax assessment model takes this problem away and allows owners to invest in the sustainability of their property and enjoy the many benefits that are gained from a cleaner, more efficient and healthier building.

The San Francisco program is based on the PACE (Property Assessed Clean Energy) framework that was pioneered in Berkeley and has since been adopted by municipalities across the nation.  Unlike some other property tax repayment models, which are solely for solar installations, the San Francisco program will also be used for energy efficiency and water conservation initiatives. Under the program terms, participants are required to conduct an energy audit and install energy efficiency upgrades before any renewable energy improvements are allowed.

Also, in contrast to many similar government-funded programs, the San Francisco initiative will be financed using up to $150 million of private capital, plus any available state and federal grants.